Overview
– 2025 municipal bond market saw $3.3B Q2 outflows but shifted to $5B inflows in long-duration munis as investors hedge macro risks.
– Fed easing and steepening yield curves boosted long-muni appeal, with high-grade bonds offering tax-equivalent yields rivaling corporates.
– Record 2024-2025 municipal issuance and active management needs highlight market dispersion, as strong states like Texas outperform weaker jurisdictions.
– High-yield muni funds like FEHIX (4.43%) outperformed benchmarks, but trade uncertainties and tax law changes pose ongoing challenges.
– Analysts advise selective credit analysis, favoring diversified municipalities with strong demographics over those with pension liabilities or population decline.
ainvest.com
Written by Isaac Lane
Friday, Oct 3, 2025